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9 2d sts^fon 88 } COMMITTEE PRINT 




Senator Claiborne Pell 



67-217 WASHINGTON : 1976 


JOHN SPARKMAN, Alabama, Chairman 

GALE W. McGEE, Wyoming 
GEORGE Mc GOVERN, South Dakota 
JOSEPH R. BIDEN, Jr., Delaware 

HUGH SCOTT, Pennsylvania 

Pat M. Holt, Chief of Staff 
Arthur M. Kuhl, Chief Clerk 



Letter of Transmittal v 

Preface vn 

Part I. Portugal — Back from the Precipice 1 

Part II. The Azores — A New Future Virtually Assured 13 

Part III. Spain — On the Road to Liberalization 17 

Appendix. Map of Portugal (Mainland) 21 

Map of the Azores 22 

Map of Spain 22 



United States Senate, 
Committee on Foreign Relations, 

Washington, B.C., February 27, 1976. 

Hon. John Sparkman, 

Chairman, Committee on Foreign Relations, 

U.S. Senate, Washington, B.C. 

Dear Mr. Chairman: I am pleased to submit the enclosed report 
on my recent trip to Portugal and Spain. 

My visit to both countries came at an important time in the political 
development of both of these strategically located countries which 
are undergoing profound changes. 

In the case of Portugal, which in 1974 emerged from 46 years of 
dictatorship, a new constitution is being drafted; parliamentary elec- 
tions have been scheduled for April 25, 1976; and a new President will 
be elected on June 27 of this year. At the same time, Portugal is 
struggling to overcome massive economic problems and is endeavoring 
to meet the special concerns of the Azores islands. In Spain, liberal- 
ization has clearly begun, and plans are being made for the first 
democratic elections in over forty years. 

I hope that my report will prove of value to the Committee in 
evaluating events in Portugal and Spain and in determining what 
America's role should be in supporting democratic development in 
those two countries. I further hope that my views on the proposed 
treaty with Spain will be helpful to members of the Committee and 
to the Senate as a whole in deciding whether to give its advice and 
consent to the ratification of that important treaty. 

Warm regards. 

Claiborne Pell. 



It has been 35 years since I lived in Portugal, where my father was 
the American Minister. At that time, Salazar was steering Portugal 
on a neutral course while Franco put Spain pretty squarely on the 
Axis side, including furnishing help to German submarines at Vigo. 
As a Delegate of the Portuguese Red Cross and as a traveler, I 
remember being arrested twice in Spain in those turbulent days. 

As the years progressed, the world seemed to pass by the two 
dictatorial regimes on the Iberian Peninsula. 

So, for me it was particularly interesting to return to these countries 
after more than a third of a century. Portugal is of particular concern, 
not only to me, but to my State where a large number of our finest 
citizens are of Portuguese heritage. 

I was accompanied by my wife, Nuala, and by Mr. Geryld B. 
Chris tianson, who has been assigned to assist me in carrying out 
my responsibilities as a member of the Senate Foreign Relations 
Committee. He took copious notes and has been of immeasurable 
help in the preparation of this report. 

Both Ambassador Frank Carlucci and Ambassador Wells Stabler 
and their staffs were of the greatest help to us, arranging appoint- 
ments with many officials and individuals and, I am afraid, incon- 
veniencing themselves in order to be of help. 

The period February 7-11 was spent in Portugal, and February 
12-13 in Spain. In addition, Mr. Christianson spent February 13-14 
in the Azores. During the course of the visit, I saw a wide variety of 
government officials and political party leaders. In Portugal, the 
visit began with a call on Cardinal Patriarch D. Antonio Kibeiro. 
Subsequent discussions were held with Prime Minister Jose Pinheiro 
Azevedo, Secretary of State for Foreign Affairs Jose Manuel Madeiros 
Ferreira, members of the Constituent Assembly, and the leaders of 
the major Portuguese political parties. In Spain I met with King 
Juan Carlos, Prime Minister Carlos Arias Navarro, Interior Minister 
Manuel Fraga Iribarne, Foreign Minister Maria deAreilza, and 
political party leaders. All of the Portuguese and Spanish officials 
with whom I spoke were most generous with their time. 



Part 1 

portugal back from the precipice 

Since the revolution of April 25, 1974, Portugal has undergone a 
period of continuing crises during which many in this country feared 
that one form of totalitarianism was destined to be replaced by an 
even cruder form. In my view, the deep pessimism about the prospects 
for the survival of democracy in Portugal was never justified, and re- 
cent events in that country have borne out my early confidence ex- 
pressed on the Senate floor on April 18, 1975 that the Portuguese 
people because of their innate common sense, conservatism and relig- 
ious nature, would find a way back from the precipice of Communist 
dictatorship. The culmination of this phase of Portugal's political 
development was the failure of the Communist inspired putsch of 
November 25, 1975 which marked an important divide in Portugal's 
political life. While the continuing Communist threat must not be under- 
estimated, the Communists and the other Marxist parties of the 
extreme left are clearly on the defensive and the democratic parties 
have the upper hand. 

In this new situation, the Portuguese people and their leaders are 
to be congratulated on the way they have gotten themselves onto a 
relatively stable course after an initial period of instability and 
violence. Any society or people that has been in the darkness of 
dictatorship for more than two score years would understandably 
wobble and zig-zag a bit as it emerged into the full light of freedom, 
just as a person who had been locked in a dark room for a long time 
would find it difficult to walk a straight line if he or she were suddenly 
thrust into bright daylight. 

In fact, it is a remarkable achievement that in the short span of two 
years Portugal has overthrown an entrenched dictatorship, divested 
itself of a large colonial empire, launched a far-reaching economic 
recovery program, established the framework for the re-establishment 
of democracy, begun the process of returning the military to the bar- 
racks, and stemmed a Communist coup — all with virtually no blood- 
shed. What other country can boast of a similar record? Much remains 
to be done, however, and the achievements to date will not be secure 
until substance is given to the emerging democratic institutions and 
the health of the economy is restored. 

Origins of the Revolution. — The young military officers who over- 
threw the Caetano regime knew what they were against but had no 
clear idea of what they were for. They reacted against thirteen years of 
frustration in the African wars which they viewed as supporting a sys- 
tem of feudal capitalism which benefitted only a very small stratum of 
Portuguese society. The young captains and majors also were disturbed 



by the low level of education among the conscripts sent to Africa and 
by the attempts of the Caetano regime to undermine the integrity of 
the military by swelling the officer corps with reservists who received 
favored treatment in promotions. 

With no democratic alternative to the Salazar/Caetano corporate 
state, the well organized Communists were the only ones prepared to 
talk the kind of language that the military plotters wanted to hear. In 
exploiting this receptivity to Marxism, a Communist party for the 
first time attempted to gain power by infiltrating a military establish- 
ment. When, after the overthrow of Caetano, the armed forces made it 
clear that they intended to become the "motor" of the revolutionary 
process, the Communists were well placed to wield influence out of 
proportion to their actual popular support. 

The Decline of Communist Power. — The Communists, however, 
overplayed their hand and were out-maneuvered by the Socialist 
Party. The Socialists extracted Communist agreement to holding elec- 
tions on April 25, 1975 for a Constituent Assembly which would draft 
a new constitution. In return, the Socialists agreed to the establishment 
of a single labor confederation, Inter sindiccd, although that involved 
the risk that the better organized Communists would take over the 
labor movement as part of a broader strategy to seize control of the 
country. The risk paid off, however, as the Socialists and the centrist 
Popular Democratic Party (PPD) scored a stunning victory in the 
Constituent Assembly elections of April 25, 1975, winning 64% of the 
vote and the Communist and small allied parties only some 19%. The 
Socialists, led by Mario Soares, were particularly successful in high- 
lighting individual freedom as the principal issue dividing the Socialists 
and the Communists. Since the April 1975 election, the Socialists and 
the PPD have been steadily improving their position in Intersindical 
to the point where they may soon be able to take control. 

After the election, Communist excesses, such as the takeover of the 
Socialist newspaper Republica and the Catholic radio station Renas- 
cenca, generated second thoughts about the Communist Party on the 
part of the military. Major Melo Antunes, who was principally re- 
sponsible for developing the political ideology of the Armed Forces 
Movement (MFA) and is now Foreign Minister, mobilized military 
opposition to the Communist leanings of the then Prime Minister 
Vasco Goncalves. Vasco Goncalves was eventually induced to resign 
and was replaced last September by Admiral Pinheiro Azevedo, a 
political moderate. Then, on November 25, the Communist Party 
made the fatal error of inspiring an attempted coup. Apparently fore- 
seeing this possibility, Azevedo had quietly but effectively concen- 
trated on restoring discipline and improving the effectiveness of one 
key Army unit in Lisbon. That unit, aided by the lack of broad popular 
support for the Communists, broke the back of the coup attempt. 

In all of the events culminating with the November 25 coup at- 
tempt, the Communists miscalculated in assuming that they could 
capitalize on their influence in key power centers — the military, the 
media, and the labor movement — and quickly seize power. More- 
over, they underestimated the strength and influence of the Catholic 
( flaurcb and the need to develop mass popular support. In the end, the 
good sense and determination of the vast majority of the Portuguese 
people prevailed. 


Thus, events in Portugal have borne out my own assessment made 
on the floor of the Senate on April 18, 1975 that "it would be a tragic 
mistake if the United States adopted policies based on the assumption 
that the Portuguese have already cast their lot for a closed Communist 
society" and that "it would be unproductive and potentially disas- 
trous for us in the United States to lose our cool and over-react." 

The extent of Soviet financial support for the Portuguese Commun- 
ist Party remains a mystery, but whatever its size it appears to have 
been largely irrelevant. According to Socialist Party sources, the Com- 
munists spent twenty times what the Socialists did in the Constituent 
Assembly election and yet fared poorly. 

Since November 25, Portugal has been moving back toward the 
center of the political spectrum. This movement has been so fast in 
fact that there is an increasing fear that the principal threat to Portu- 
guese democracy may now come from the extreme right. An unstable 
political ping pong effect may thus be emerging. It seems clear, how- 
ever, that Portugal will become neither a communist state nor a 
rightist one. Political stability is most likely to be found in the con- 
solidation of power around the parties of the center4eft or non-com- 
munist left. That means that the Socialist Party and the PPD are 
likely to wield the preponderance of power, although it cannot be ex- 
cluded that the center-right Center Social Democratic Party (CDS), 
which seems to be growing in strength, will also play an important 

Looking to the future, a long list of urgent tasks must be addressed 
by the Portuguese people as a whole, their elected representatives, the 
government, the political parties, the military, business leaders, and 
the Church before Portuguese democracy is consolidated. In this pro- 
cess the United States must play a supportive role — not by interven- 
ing or offering gratuitous advice on the composition of the government, 
but by providing economic assistance and showing patience and 
understanding as the Portuguese effect needed economic and social 
changes. The Portuguese people have clearly demonstrated that de- 
spite their political inexperience resulting from 48 years of dictator- 
ship they now constitute a very sophisticated and sensible body politic 
which merits the confidence and trust of the American people and the 
United States Government. 

In order to illustrate the challenges facing the Portuguese people 
and the new directions which they are seeking, I would like to discuss 
in turn the economic situation in Portugal, including what the United 
States can do to assist in rebuilding the Portuguese economy ; the role 
of the Church; the role of the military; and Constitutional and political 
development, including the electoral process. I have reserved the 
important question of territorial integrity and the Azorean inde- 
pendence question for discussion in Part II of this report. 

Rebuilding the Portuguese Economy. — In blunt terms, the Portuguese 
economy is in a mess and getting worse. Almost all of the Portuguese 
government officials and political party leaders with whom I spoke 
told me that the greatest need is to stabalize the economy; otherwise 
there will be increasing threats from both the extreme left and the 
extreme right. The key to democratic development is therefore sound 
economic development. 

Portugal's present economic problems are usually blamed on the 
radical policies pursued by the various governments established follow- 


ing the April 1974 revolution. To a large extent that is true, but it 
should also be borne in mind that Portugal has suffered from serious 
structural defects in its economy for many years and enjoyed an 
artificial prosperity under the Salazar/Caetano regime. During those 
years, Portugal ran a chronic trade deficit in its balance of payments, 
largely because of food imports. Food production declined in Portugal 
in the 1960's because some 60,000 people left the farms each year, 
primarily to take jobs in the booming economies of the European 
Economic Community. Receipts from tourism and emigrants' remit- 
tances covered the trade deficit and permitted the country to ignore 
its agricultural problem and the weakness of its export sector. The 
Portuguese banking industry was another source of weakness. Although 
financially strong, the banks concentrated on the short-term financing 
of foreign trade and land speculation to the detriment of long-term 
capital investment in industry. 

Portugal's low level of unemployment was also artificial as approxi- 
mately 100,000 workers a year left Portugal in the 1960's to work 
abroad. In 1974, over one million workers, or approximately one-third 
of Portugal's labor force, resided abroad, including in the African 
colonies. The swollen ranks of the civil service and the armed forces 
fighting in Africa further relieved pressure on the Salazar/Caetano 
regime to develop employment opportunities at home. The Portuguese 
economy under Salazar and Caetano was thus living on borrowed 

When the April 1974 revolution occurred — it could not have come 
at a worse time economically — the international economy was deteri- 
orating rapidly, oil prices were rising, Portuguese exports — notably 
textiles — were falling, and because of declining job opportunities 
abroad the export of Portuguese labor fell from an annual rate of 
100,000 to 20,000 in 1974 thus requiring the Portuguese economy to 
provide jobs and housing for a larger work force. With so mam' Por- 
tuguese still working abroad, further layoffs of overseas Portuguese 
workers threatened to result in a large flow of Portuguese workers 
back to Portugal. After the revolution, the employment and housing 
problem was further exacerbated by the influx of some 350,000 refugees 
from Angola, most of whom arrived with few resources or marketable 
skills. Thus, international economic realities and decolonization would 
have presented any government — however wise and cautious — with 
monumental problems. 

The revolutionary process clearly added to these economic woes. 
Workers felt exploited under the Salazar/Caetano regime and de- 
manded higher wages and a shorter work week after the revolution. 
Wages rose by 42 percent in 1974 and by 30 percent in 1975. At the 
same time consumption rose and output fell. The obvious result was 
inflation, which was in the range of 20-30 percent in 1975. Food 
shortages also occurred, as the distribution system became dislocated 
and agrarian reform disrupted production patterns. 

Most distressing of all, new fixed business investment plummeted 
in 1974 to less than one-third of the 1973 level. Investment may even 
be negative now as capital has fled Portugal and some plants have 
ceased production because of bankruptcy. Productive capacity, and 
therefore job opportunities, may thus actually be declining. For those 
firms that were able to stay in business, sharply rising wages lowered 
corporate profits and thus put pressure on the internal generation of 


private investment capital. Firms borrowed from the banks to finance 
these increased wage bills. Thus once again, as in the days of Salazar 
and Caetano, the banks were employing their funds for short-term, 
nonproductive uses. 

The nationalization process also disrupted the Portuguese economy 
and contributed to the decline in investment. Although only Portu- 
guese firms were to be nationalized, some foreign firms were illegally 
occupied by workers as were some Portuguese firms which, because 
of their small size, were supposed to be exempted from nationalization. 
The nationalization of banks had a particularly far reaching effect. 
Government officials discovered that because of the nature of the 
Portuguese economic structure, characterized by conglomerates of 
family fiefdoms and interlocking corporate relationships, assuming 
control of one bank often resulted in taking control of some 150 other 
firms. I was told that the government acquired control of a half dozen 
or so newspapers in this manner. 

For the most part, the relatively few families which controlled the 
Portuguese economy left Portugal. This exodus, together with the 
replacement of professional managers by workers committees in 
nationalized or occupied firms, created a large management void 
which the revolutionary regime has not been able adequately to fill. 
Many of the nationalized firms have, as a result, either gone bankrupt 
or are operating uneconomically. Moreover, the revolutionary regime 
cast aside the investment projects formulated by the Caetano govern- 
ment and did not develop alternative ones. 

It was not only industry and banking that underwent nationaliza- 
tion and suffered from illegal occupation. Under an agrarian reform 
law, aimed at breaking up the large estates in the Alentejo region of 
southern Portugal, land holdings are limited to 1250 acres of dry land 
or 125 acres of irrigated land. Holdings in excess of these amounts 
were expropriated and turned into cooperatives rather than divided 
among the individual tenant farmers who worked the land. 

As with nationalized industry, the criteria for expropriation were 
not always observed and many small farms were seized. The setting 
up of cooperative farms was done in the early days of the revolution 
under Communist leadership and became bases for Communist 
activity throughout Portugal. They became areas for storing arms and 
staging areas for the shock troops which the Communists dispatched 
to Lisbon and other urban areas. At one point the Alentejo, under the 
strong influence of the Communists and other extreme leftists groups, 
became virtually a state within a state. 

Reaction set in, however, as farmers in the north, where small 
holdings are the rule and large estates few in number, joined with 
small farmers in the south and the discontented former tenant farmers 
who resented the cooperatives, in pressuring the authorities in Lisbon 
to suspend the agrarian reform law — threatening in one instance to 
cut off food supplies to Lisbon. The Azevedo government has responded 
by reaffirming its support for agrarian reform, but has promised to 
end "deviations" in its application. 

As a result of the above developments, the Portuguese gross national 
product (GNP) declined by 6-7 percent in 1975; unemployment rose 
to over 400,000 or approximately 12-15 percent of the labor force 
(roughly equivalent to the unemployment rate of over 14 percent 
in my own state of Rhode Island) ; and the balance of trade will 


probably be in deficit by over $1 billion in 1975 as a result of falling 
demand for Portuguese products and disrupted production and 
marketing. Whereas in other circumstances, Portugal could fall 
back on emigrants' remittances and receipts from tourism to soften 
the blow, Portuguese workers abroad became alarmed at develop- 
ments in Portugal and sharply reduced their remittances, and tourists 
stayed away in droves. Consequently, the foreign currency portion of 
Portugal's reserves (over $1 billion when the Caetano government 
fell) was quickly exhausted, rendering the country completely 
dependent on its sizable but vulnerable gold reserves. 

There is a certain momentum in the process of economic deterioration 
which must be halted. The economy must therefore be stabilized 
before it can be improved. With almost all of its reserves in gold, 
Portugal's immediate problem is one of foreign exchange liquidity to 
pay for essential import requirements such as food (Portugal imports 
about one-half of its food requirements). There is also the longer 
term developmental problem relating to investment and productivity, 
but Portugal must solve its liquidity problem first. This liquidity 
problem is the symptom of the weakness of Portugal's agricultural 
sector, the need to induce a return of tourism and emigrant remit- 
tances, and the necessity of rationalizing investment. 

Portugal's economic problems are too large and complex to be 
solved by Lisbon alone. Even with a highly restrictive economic 
austerity program, Portugal may need as much as $1 billion in foreign 
assistance over the next year or so — primarily in the form of monetary 
arrangements to cover foreign exchange losses which could run as 
high as $100 million monthly in 1976. 

Portugal could meet its liquidity requirement by selling some of 
its 868 tons of gold, but not without substantially depressing the 
international gold market. If the price of gold were, for example, 
to be driven back to the price of $35 an ounce which prevailed a few 
years ago, Portugal's reserves Would be exhausted before the end of 
this year. As a result, it is more productive for Portugal to use its 
gold as a form of security for the loans being sought, and Portugal 
is already doing this. 

Portugal is not, therefore, asking for a handout while sitting on a 
fortune in gold. Portugal may yet have to sell some gold, but gradual, 
orderly sales would be to the advantage of Portugal as well as other 
nations with large gold holdings. 

Beyond the immediate problem of liquidity, Portugal requires 
concessional economic assistance in the form of loans, grants, and 
technical advice. Current or planned United States programs- 
including those initiated in fiscal year 1975 when the United States 
began its assistance program to demonstrate American support for 
Portuguese democracy — total over $200 million. Portions of this 
total are still subject to Congressional approval, but it is clear that 
the United States is prepared to provide substantial assistance to 
Portugal. The detailed amounts involved are as follows: 


[In millions of dollars) 

1. A.I.D 

(a) Grant. 

Technical assistance... 
Refugee relief 

(b) Loan.. 

Low-income housing.. 
Feasibility studies 

2. Housing investment guaranty (HIG). 

3. Public Law 480 title I 

4. Commodity Credit Corp. (CCC) 


Fiscal year Fiscal year Transitional Fiscal year 
1975 1976 quarter 1977 

(actual) (proposed) (proposed) (proposed) 

15.0 1 55.0 10.0 55.0 

(.75) (2.0) 

(.75) (1.0)..... 

....... (35.0) 

(14.25) (19.0) (10.0) (53.0) 

10.0 10.0 

15.0 30.0 

30.0 ? 

35.0 U10.0 3io.O 95.0 

1 The Senate on Dec. 18, 1975 authorized $50,000,000 of this requested amount. 

2 In addition $7,500,000 was obligated in fiscal year 1976 for the Angolan refugee airlift. 

3 Although the Administration requested $10,000,000 for the transitional quarter, the Senate authorization provides for 
li of the fiscal year 1976 authorization to be applied to the transitional quarter. Thus, in the case of supporting assistance 
to Portugal, }4 of $50,000,000 or $12,500,000 is authorized. 

In formulating its economic assistance program, the United States 
has been asked by the Portuguese Government to concentrate — 
wisely I believe — on social infrastructure, leaving the rebuilding of 
industrial infrastructure largely to the West Europeans. In FY 1976, 
U.S. programs will include, for example, a*grant for the relief resettle- 
ment and employment of returnees from Angola, and loans and grants 
for use in such areas as agriculture, rural development, housing and 
urban development, community health, education, transportation 
and public administration. 

The European Economic Community is providing $187 million in 
project loans to Portugal, and the European Free Trade Association 
will provide another $100 million. Most recently, West Germany 
established a bilateral assistance program involving $25 million in 
concessional aid and $250 million in a central bank loan. 

One Portguese government official told me that, in his view, foreign 
aid is justified only if there is a coherent, coordinated plan for utilizing 
it. The Azevedo government has recognized this imperative and has 
set up an office to coordinate all foreign assistance requirements of the 
various ministries in the government. In addition, guidelines are being 
drawn up to aid the next government, to be elected in April, in planning 
and implementing a sound program utilizing foreign assistance. 

I believe strongly that Portugal's future lies with the West and 
that the United States, in cooperation with its West European allies, 
must remain committed to providing the economic assistance which 
Portugal needs. Those Portuguese leaders with a Western democratic 
orientation must be able to point to tangible evidence of Western 
support if their views and ideals are to prevail. Portugal, after almost 
four centuries of looking to Africa and Asia for national fulfillment, 
is returning to Europe. The dispersal of Portuguese around the world 
is being reversed, and Portugal needs considerable help in coping with 
its adjustment not only to a new political orientation but a new eco- 
nomic and geographic one as well. 

While foreign assistance will be an important factor in stabilizing 
the Portuguese economy, much remains to be done by the Portuguese 
themselves. Many politicians of both the left and the right now 


recognize that the process of nationalization went too far. If the 
Portuguese economy is to recover, private enterprise — which still 
constitutes 70 percent of Portugal's industry — must be encouraged 
and both private and public investment increased. 

Already, it is becoming increasingly common for the former owners 
of nationalized or illegally occupied firms to be called back — in some 
cases by the workers themselves — to restore efficient management. 
Whether, or to what extent, private ownership will be restored in such 
rases is not yet clear. In the case of the nationalized banks, the 
omelet is unlikely ever to be unscrambled and private ownership 
restored. Meaningful compensation for the seizures is, however, a 
distinct possibility; and, as in France just after World War II 
new private banks — especially investment banks — may be permitted 
to co-exist along with the government-run nationalized banks. 

For the present, it is probably unrealistic to expect much new 
foreign or domestic private investment. One high Portuguese official 
told me that he expected it to take up to two years to establish a 
favorable climate for new private investment. During that period, 
he said, the government should take steps to end labor unrest and 
develop sound government investment projects, with a view toward 
thus encouraging private investment to follow. In this connection, 
other sources told me that the Portuguese government is dusting off 
many of the investment projects of the Caetano regime and may 
revive some of them. I also understand that an investment code, 
aimed at stimulating private investment, is being drawn up and will 
be issued soon. 

The Church in Portugal. — The Roman Catholic Church in Portugal 
made a conscious decision not to become involved in the politics of the 
revolutionary process. Rather, it saw — and continues to see — its role 
as one of fostering reconciliation, defending human liberties, and 
encouraging the development of social consciousness and democratic 
values. The events of the past two years have had no apparent nega- 
tive impact on the Church or on religious practices. On the contrary, 
the whole revolutionary process seems to have brought credibility to 
the Church and reinforced its image. Even the Communists recognized 
the strength of the Church when they made a point of declaring prior 
to the Constituent Assembly election that the position of the Church 
would not be threatened if they won. The Church suffered from some 
wildcat seizures of parish residences and other property, and its Radio 
Reriascenca was seized by workers; but there was never any govern- 
ment directed action against the Church, and all illegally seized 
properties have been restored. 

The Role oj the Military. — Just over a year ago, the Armed Forces 
Movement created the Council of the Revolution as the supreme 
ruling body in Portugal and forced the political parties to sign an 
agreement concentrating political power in the Council's hands for the 
next three to five years. The armed forces seemed at that time firmly 
resolved to play an active and long-term role in governing Portugal. 
Since then, a dramatic change has occurred, particularly after the 
attempted coup of November 25. The Council of the Revolution, and 
indeed the military as a whole, is now dominated by so-called "opera- 
tionals", officers who feel that politics should be left to the politicians 
and that the military should return to the barracks as soon as possible. 


The current military leadership feels that the military establishment 
was used by the Communist Party and that further military embroil- 
ment in politics could pose a threat to the survival of the armed forces 
as an institution. 

In line with this outlook, the Council has instituted talks with the 
political parties to revise last year's pact and is expected to relinquish 
power to an elected president and legislature, although some residual 
' 'watchdog" role for the military will continue. Those talks were 
drawing to a close when I was in Lisbon, and the political parties 
seemed to have achieved the Council's agreement to all of their de- 
mands. Moreover, responsibility for internal security is to be given 
back to the police. 

Along with its self-willed reduction in political influence, the armed 
forces are also engaged in dramatically cutting the size of the military 
establishment. What once was a 180,000 man army, for example, will 
soon be cut down to 26,000. With no African war to fight and a 
NATO commitment which has been nothing more than a paper one, 
the Portuguese armed forces are now facing an identity crisis as they 
return to soldiering. It may be, in fact, that along with a healthy 
economy, political stability will depend on finding a meaningful new 
role for the Portuguese armed forces. For if the young officers who 
found a mission in the revolution do not find fulfillment in a purely 
professional military career, the temptation to return to politics may 
be great. 

Fortunately, a solution for that problem is close at hand. If Por- 
tugal's military commitment to NATO could be made a meaningful 
one; if military discipline could be restored through the professional- 
ism which responsibility for a specific NATO mission could provide; 
if the Portuguese armed forces were to feel involved in a cooperative 
military effort in the defense of the entire NATO area, a real alterna- 
tive to politics and a legitimate source of professional pride and 
accomplishment would be found. 

I will not attempt to suggest what kind of NATO task the Por- 
tuguese armed forces might assume, but an effort should be made 
to initiate the necessary discussions and planning for such a role as 
soon as possible within NATO. Any meaningful role for Portugal will 
obviously generate a requirement for new military equipment. Most 
of the present equipment of the Portuguese armed forces is obsolete 
or obsolescent and needs to be replaced. Such equipment needs will 
have to compete with economic development requirements, which 
means that foreign military assistance will be required. I support such 
assistance, but believe it should not be provided by the United 
States alone. Our other NATO allies have a large stake in the develop- 
ment of democracy in Portugal and in Portugal's assumption of a 
larger role in NATO defense. Consequently, equipping the Portuguese 
armed forces should be a cooperative effort in which our European 
allies pay a major role. 

Constitutional and Political Development. — On April 25 of this year, 
if all goes well, the people of Portugal will choose their first democratic 
legislature in 48 years. The campaigning for that election is already 
underway even though the constitutional framework in which the new 
Legislative Assembly will operate has not been established. There is 


even some question as to whether the elections can actually be held if a 
new constitution has not been promulgated by April 25. The Presi- 
dential election will be held on June 27. 

The Constituent Assembly, which was elected in April 1975 and was 
supposed to have drawn up a constitution within 90 days (several 
extensions have been made since then) has the following composition : 

Socialist Party (PS) 116 

Popular Democratic Partv (PPD) 81 

Communist Party (PCP) 30 

Center Social Democratic Party (CDS) 16 

Popular Democratic Movement (MDP) 5 

Popular Democratic Union (UDP) 1 

Independent (from Macau) 1 

Total 250 

The Constituent Assembly is clearly dominated by the moderate 
parties of the center-left. The Socialists and centrist PPD alone have 
197 of the 250 seats in the Assembly; and if the center-right CDS is 
included, the three parties which are most likely to determine the 
destiny of democratic development in Portugal have a commanding 
majority of 213 seats. 

The Assembly is drafting a continental European-style constitution, 
which means that it will be more detailed than the American Consti- 
tution and will be more subject to change. The Constitution begins 
with a statement of fundamental principles followed by three sections 
entitled Fundamental Rights and Duties, Economic Organization, and 
Organization of Political Power. 

All but the last section on political power have been completed. 
Work on that section has been particularly slow because of the dif- 
ficulty in stipulating the role of the armed forces in the government. 
Consideration of that aspect was suspended after the November 25 
coup attempt. Now that a new pact has been negotiated between the 
Armed Forces Movement and the political parties, prospects are 
greatly improved for completing the Constitution prior to April 25. 

Those portions of the Constitution completed to date reflect the 
heavy concentration of members of the left wing of the Socialist 
Party in that party's Constituent Assembly delegation, and the strong 
leftist orientation of both the country and the Armed Forces Move- 
ment at the time when the Assembly began its drafting. Given the more 
conservative trend in the country now, including greater emphasis on 
"democracy" rather than "socialism" in recent political rhetoric, the 
Constitution that emerges will probably be more leftist than the mood 
of the country. 

In the opening declaration of fundamental principles for example, 
it is stated that Portugal is a republic dedicated to transforming it- 
self into a classless society and that one of the fundamental duties of 
the state is to socialize the means of production and wealth. Pluralism 
of expression and democratic political organization are guaranteed, 
but they are linked to the objective of the transition to socialism. In 
international relations, the dissolution of politico-military blocs is 

In the section dealing with economic organization, it is stated 
that "the socio-economic organization of the Portuguese Republic 
is seated in the development of socialist economic relationships by 
means of collective expropriation of the principal means of production, 


land, and natural resources, and the exercise of democratic power 
by the working classes." Moreover, the nationalizations effected 
since April 25, 1974 are considered "irreversible conquests of the 
working classes." 

Except for the apparently irreversible nature of the expropriations 
which have taken place so far, the Constitution leaves it to the Legis- 
lative Assembly to determine how the principles set forth in the 
Constitution are to be applied in the future. Consequently, the polit- 
ical composition of the legislature and the political pressures to which 
it responds will be more important than what is stated in the 

The nature of the presidency and the powers vested in that office 
will also be important factors in determining the course of both polit- 
ical and economic development in Portugal. The question of a strong 
or weak President has not yet been resolved within the Constituent 

During my discussions with members of the Constituent Assembly 
and with political party leaders, I detected a healthy concern that 
democracy not be discredited again as it was during the 1910-28 
interval between the fall of the monarchy and the accession to power 
of Salazar. The experience of present day Italy and pre-de Gaulle 
France has also not been ignored. I was also impressed by the strong 
recognition by many with whom I spoke that strong leadership .will 
be required if the Portuguese people are to be persuaded to mal^ tjie- 
sacrifices necessary to rebuild the economy. 

Looking ahead to the April" and June elections and the establish- 

ment of a democratically elected government, the people of Portugal 
are fortunate that the democratic parties of both the right and left 
are well led and determined to avoid jhe imposition of either a Com- 
munist or an extreme rightist dictatorship. They have proven their 
mettle over the past two years; and I am confident that whichever 
democratic party or coalition of democratic parties governs Portugal, 
the country will have sound leadership, with which the United States 
can work closely and amicably. 

The Socialist Party seems clearly to be the largest and best orga- 
nized party, but the strong support which that party achieved in the 
Constituent Assembly election may be misleading. At the time of 
that election, it was generally assumed that the Socialist Party was 
the only moderate party which the Armed Forces Movement would 
permit to win. Many voters, who might otherwise have voted for the 
centrist PPD or the rightist CDS, apparently cast tactical votes for 
the Socialists in order to ensure that a Constituent Assembly would 
actually be constituted. 

With the currently less political bent of the Armed Forces Move- 
ment and the increase in conservative sentiment in the country, the 
PPD and the CDS could make significant gains in April. Such gains 
may make it impossible for the Socialists to maintain their position 
of opposing a coalition government. The CDS openly speaks of the 
desirability of a CDS-Socialist coalition, arguing that the CDS can 
provide the necessary business confidence necessary for economic 
recovery. A more ominous possibility being talked of is a Socialist- 
Communist coalition. Such a partnership seemed very unlikely when 
I was in Portugal but that possibility cannot be excluded, particularly 
if current fears concerning a renewed threat from the extreme right 
turn out to be well founded. 

Part II 


The Azores, an integral part of Portugal, consist of nine beautiful 
volcanic islands located strategically in the northeastern Atlantic 
about one-third of the way from Portugal to North America. Although 
discovered by Portuguese navigators and forming part of Portugal 
for over 500 years, the people of the Azores, some of whom are of 
Flemish, French, and Arab extraction as well as Portuguese, have 
developed a distinct personality and have long felt disadvantaged in 
comparison with the mainland. 

Azoreans have participated in the political life of Portugal on an 
equal basis with mainlanders — the first President of the new Republic 
of Portugal established in 1910 was in fact an Azorean — yet they have 
felt that economically and culturally they have been treated as second- 
class citizens and that they have been exploited for the benefit of the 
mainland. They have particularly chafed under a system in which 
the wealth developed in the Azores has been controlled by banks 
domiciled in Lisbon, that the prices of certain products are set in 
Lisbon, that transportation and trade policies have been formulated 
for the benefit only of the mainland, and that the economic develop- 
ment needs of the islands have been ignored. Culturally, Azoreans 
have resented that they have had to go to the mainland for higher 
education. Only this year has a university been established in the 

Although the islands and their people are quite different individu- 
ally, they share a common alienation from the mainland which has 
manifested itself in the development of separatist sentiments on 
several occasions over the past 100 years, most notably when main- 
land Portugal was suffering from political or economic troubles. 

Thus, it is not surprising that when political turmoil wracked the 
mainland after the fall of the Salazar/Caetano regime, cries of Azorean 
separatism were heard again. When the new revolutionary regime 
declared that the island groups of Cape Verde and Sao Tome/Principe 
were to be granted independence, many Azoreans felt that the Azores 
should also be given an option for independence. 

The sentiment for separatism was not taken seriously in Lisbon 
until June 1975 following a decision by the authorities in Lisbon to 
pay lower prices for milk produced in the Azores than on the main- 
land. The widespread demonstrations of farmers on Sao Miguel 
island, the largest of the Azorean islands, on June 6 took on an in- 
dependence character, and for the first time the Front for the Libera- 
tion of the Azores (FLA) came to be seen in Lisbon as a movement 
that had to be taken into serious account. The military governor of 
Sao Miguel who sympathized with the Azorean complaints, promised 
to take up their case in Lisbon. 

Azoreans became further disenchanted with Lisbon during the 
heyday of Communist activity in Lisbon during July and August. 



Strongly anti-Communist, Azoreans (largely members of the FLA) 
closed down the Communist Party offices and forced the party's 
leaders to leave the Azores. Apparently realizing that the rising 
anti-Communist sentiment in the Azores threatened to split that 
area off from the rest of Portugal, the then Prime Minister Vasco 
Goncalves agreed to the military governor's proposal that a separate 
administrative authority be set up for all of the Azores and that the 
three separate districts in the Azores be done away with. The decree 
law which set up the Junta Governativa (Governing Board) for the 
Azores was vague concerning the powers to be exercized by the Junta, 
but as confusion reigned in Lisbon, the Junta, composed of four PPD 
members and two Socialists (and presided over by the same army 
commander who suggested setting up the Junta) acquired more and 
more power on a de facto basis. In fact, virtually all decisions on 
matters of interest to the Azores are now made by the Junta or on 
the basis of its advice. 

After the establishment of the Azevedo government in Lisbon, the 
Junta in October 1975 set up a drafting committee to prepare a 
statute of autonomy under the authority granted to it by the decree 
law but before Constitutional authority to do so had been approved. 
The Junta, increasingly confident and powerful, also issued a state- 
ment virtually threatening independence if, in the view of the Junta, 
the new government in Lisbon did not govern properly. This state- 
ment, issued on November 15, 1975, expressed support for the Azevedo 
government but, fearing civil war and the possible imposition of a 
dictatorship of the left or right, put the Azevedo government on 
notice that if it could not govern, the Junta would take whatever 
steps were necessary to secure the "individual liberties essential to a 
democratic life." This declaration was supported by large demonstra- 
tions throughout the Azores on November 17. 

In December, the government in Lisbon, apparently feeling that 
the Azorean sentiment for greater autonomy was entirely linked to 
anti-communism and that the failure of the November 25 coup would 
thus dampen that sentiment, attempted to issue a new decree law 
reducing the powers of the Junta. The Junta stood jfirm, however, 
and Lisbon backed down. 

The statute of autonomy is virtually complete as of this 
writing, and grants broad powers, including over the Azorean 
economy, to the Azores regional government. In the absence 
of a Portuguese parliament, it is not clear who will approve 
the statute — the Azevedo government or the Council of the 
Revolution. It is clear, however, that for the Azoreans the statute 4 is 
non-negotiable. The events since June 1975 have been a great source 
of pride to Azoreans and they are accustomed to taking to the streets 
if necessary to get what they want. Furthermore, virtually all of the 
enlisted men in the army detachment headquarters in Sao Miguel are 
Azoreans, as are about one-half of the non-commissioned officers, 
and one-third of the officers. The army, therefore, cannot be counted 
on to impose Lisbon's will if that proves contrary to Azorean desires. 

It is very likely now that the Azores will soon have a political 
structure permitting them to determine their own density within the 
Portuguese body politic. Whether that new status will serve to ensure 
that the Azores remains a part of Portugal or will only strengthen the 


sentiment for independence will probably depend on how the statute 
works out in practice. Certainly, the new arrangement and those 
persons in the Azores and Lisbon who will be charged with making it 
a success, deserve a chance to establish that autonomy, not independ- 
ence, is the best way to ensure the well-being of the Azores. 

The strength of independence sentiment must not be under- 
estimated by Lisbon. One Azorean deputy in the Constituent Assembly 
told me that in his view if independence were put to Azoreans in a 
referendum now, some 70-80 percent would support it. Soundings 
taken at rallies of the Azorean wing of the Center Social Democratic 
party, in which independence sentiments are strong, showed that 
45 percent favored independence, 37 percent wanted the Azores to 
be a federal state within Portugal, and only 18 percent favored 
autonomy. Others, however, believe that if autonomy is properly 
presented and put into practice, Azoreans would prefer that course. 
Whichever of these views is correct, it is evident that Azoreans will 
not accept a return to their former status. Whatever transpires with 
regard to the future status of the Azores, it is my strong belief that 
the United States should continue to remain uninvolved in that 
purely internal matter. The Communists would exploit any American 
support for Azorean independence, and Azoreans would misunder- 
stand any American statements or actions in favor of maintaining 
the status quo in the islands. 

U.S. Base in the Azores. — The subject of renewing the base agree- 
ment was not raised by the Portuguese during the course of my visit 
to Portugal. I sensed, however, that no significant opposition to a 
continued American presence exists. In the Azores, the feeling toward 
the base is, in fact, very positive. Given the fact that Azoreans will 
play an even greater role in all matters concerning the islands, it 
should be expected that the Azorean regional government will be 
involved in the base renewal negotiations and will be seeking sub- 
stantial economic benefits in exchange for base rights. When the 
present agreement was negotiated in 1969, the weak Caetano govern- 
ment wanted the base agreement as a symbol of American support 
and was prepared to accept very little in return for use of the base at 
Lajes on Terceira island. The terms for renewal are likely to be 

Part III 


My visit to Spain was the first fact-finding trip to Spain by a member 
of the Congress since the death of Franco on November 20, 1975. The 
visit also came during the interval between the signature in Madrid on 
January 24 of the Treaty of Friendship and Cooperation with Spain 
and its submission to the Senate on February 18 for its advice and 
consent to ratification. The combination of these circumstances pro- 
vided an opportunity to hear the views of Spanish authorities on the 
important political evolution which has begun in Spain and the re- 
lationship of the treaty to that evolution. 

In conversations with King Juan Carlos I, Prime Minister Arias, 
Interior Minister Fraga, Foreign Minister Areilza, and with other 
leaders of two of the as yet unauthorized political parties, we discussed 
the treaty and the obligations involved. I was categorically assured, 
though, that no new American political and military commitments, 
beyond those specifically stated, would flow from the treaty. 

In concluding that I should support ratification of the treaty, con- 
siderations relating to political liberalization were decisive. The treaty 
has the potential to contribute greatly to democratic development in 
Spain. Significant political changes have occurred in Spain since 
Franco's death, and through the treaty, the United States is in a 
position to encourage further progress toward democracy. While I 
will support the treaty, it is with the belief that the present liberalizing 
trend will continue and that the Administration should lend its weight 
to helping the Spanish Government move further toward democracy. 

While in Madrid I was very impressed by the fact that the total 
number of prisoners is only 8500. This amounts to 24.1 prisoners per 
100,000 of population as compared to our own country where the 
ratio is 97.8 prisoners per 100,000 population. The United States, 
therefore, has about four times as many prisoners proportionately as 
Spain does. Within the total of 8500 prisoners in Spain, the number of 
political prisoners is 506, down from the level of 1500 or so which 
revailed when Juan Carlos became king last November 22. The 
panish authorities expect that number to drop to less than 100 
(composed of terrorists and political assassins) by the end of July, 
1976. In this connection, the Spanish Government is well aware, as a 
result of my visit, of the importance attached by the Congress to the 
human rights provisions in the foreign assistance legislation which will 
be applicable m connection with carrying out the terms of the treaty. 

A summary of the record of liberalization since Franco's death is 
as follows : 

1 . Political Activity 

Tacit acceptance of open political activity by all non-communist 
political parties or groups, e.g., holding of Christian Democratic 



Party Congress Jan. 30-31, 1976, and public rallies of Socialists 
(PSOE) in February. 

2. Elections 

Shortening terms of mayors elected indirectly Jan. 18 and 25, 
1976 from four years to eleven months; i.e., until direct general 
municipal elections with universal suffrage are held in November 
1976 for town and city councilmen who will choose new mayors. 

3. Police Practice 

Discontinuance of wholesale arrests and harassment of unauthor- 
ized public demonstrators; unprecedented arrests of right-wing 

4- Press Freedom 

Discontinuance of government seizures of objectionable publica- 
tions and prior censorship of all but communist-related publications 
or articles. Frequent interviews of government ministers with local 
and foreign press. Government controlled television has been giving 
coverage to political events, including activities of the Socialists 
and Communists. 

5. Labor 

Acquiescence in allowing both official syndicates and illegal unions 
to carry out non-political strikes. Government intervention in strikes 
in public utilities only after public opinion favored such intervention 
to prevent breakdown in essential services, e.g., public transportation. 

6. Exiles 

Issuance of passports to political exiles of which some 500 have 
returned to Spain, e.g., Rodolfo Llopis, former Secretary General of 
Spanish Socialist Workers Party (PSOE). 

7. Freedom oj Travel j or Opposition Leaders 

Issuance of passports to PSOE leader Felipe Gonzalez, and other 
Socialist leaders to attend international meetings; issuance of pass- 
port to Communist labor leader Marcelino Camacho. 

8. Pardon oj Prisoners 

Since the King declared a pardon November 25, 1975, some 6,500 
prisoners have been freed including approximately 500 political 
prisoners, according to Spanish authorities. As of February 1, 1976, 
the penitentiary population was approximately 8,500 including an 
estimated 500 political prisoners. 

9. Abrogation of Objectionable Features of the Anti-Terrorism Law 
The Spanish government issued a Decree/Law on February 6 

abrogating 14 articles of the August 28, 1975, Law on the Prevention 
of Terrorism, returning jurisdiction of terrorist crimes to civil courts 
and eliminating a mandatory death sentence. 

10. Appointment of Government Commission on Constitutional Reform 
An eigh teen-member commission held an initial meeting on Febru- 
ary 11, 1976, and will meet weekly to act upon the Premier's proposals 
for reforms leading to a bicameral legislature with one chamber 
elected by universal suffrage. 


11. Universities 

Removal of police from university campuses unless requested by 
the Rector. Non-interference with non-communist political activities, 
e.g., speeches by PSOE leader Felipe Gonzalez in Seville and PSP 
leader Tierno Gal van in Madrid. 

12. Regional Issue — Basques and Catalans 

Official permission to use local languages in public affairs and to be 
taught in schools; cabinet decision in February 1976, transferring 
certain administrative powers from Madrid to the province of Cata- 
lonia; similar proposals are under consideration for the Basque area. 

13. Prorogation of "Cortes 1 ' 

The present mandate of the "Cortes", scheduled to be renewed 
under the old electoral system in March, 1976, has been extended for 
18 months to allow government time to introduce constitutional 
changes. Without that temporary extension, a new Cortes not chosen 
by universal suffrage would be installed for a five-year term. 

1J+. Foreign Relations 

A. Foreign Minister announced intention to consider formal ties 
with Israel. 

B. Orderly withdrawal from last colony in Western Sahara. 

C. Re-opening of dialogue with Europe, especially with Council of 
Europe, thus demonstrating a willingness to discuss human rights 

These are encouraging developments, but there will be little incen- 
tive for the Spanish Government to build upon this record if the 
Senate rejects the Treaty of Friendship and Cooperation and thus 
expresses its collective judgment that there is no distinction between 
the Franco regime and the current one. If, on the other hand, the 
treaty is approved, the hand of the liberalizers will be strengthened, 
as they will be able to demonstrate that they have secured something 
which the Franco regime could never have obtained — a broad treaty 
of cooperation in defense and other matters with the United States. 
Approval of the treaty would contribute to the momentum of success 
and international acceptibility of the new regime. Rejection of the 
treaty would seriously undermine the liberalization trend and probably 
also decrease the ability of King Juan Carlos to exercise a moderating 
influence in Spain. 

The principal opposition parties would have preferred that the 
treaty be concluded by a democratically elected government. I share 
that preference, but unfortunately the previous executive agreement 
relating to the use of military facilities in Spain expired last Septem- 
ber 26; and if a new agreement is not concluded soon, the United 
States will have to cease its use of the bases in Spain by September 26 
of this year. I received the distinct impression that despite reservations 
in public about the treaty, all of the democratic parties understand 
this predicament and will not seriously oppose the treaty. It is inter- 
esting in this connection to note that the diehard Franco supporters — 
the so-called 1 'bunker' ' element — have taken the most reserved 
position on the treaty. 

In each of my meetings with Spanish officials, I asked whether, in 
their view, the treaty involved any commitment, specific or implied, 


secret or open, either to come to the defense of Spain if attacked or to 
assist in the event of any internal disturbances. I was assured that no 
such commitments were involved and that the treaty means nothing 
more or less than what it says. 

Since in my view ratification of the treaty is justified, primarily on 
the basis of the contribution which the treaty can make to the evolu- 
tion of democracy in Spain, it is important to bear in mind the follow- 
ing scenario which the current regime has established for the restora- 
tion of democracy. The regime has set in motion a process of constitu- 
tional reform which would provide a large measure of direct democracy. 
At the national level, a parliament would be established with a lower 
chamber directly elected by universal suffrage and a more conservative 
upper chamber with a corporate structure along the lines of the current 
single chambered "Cortes." 1 This new upper chamber would consist 
of representatives selected by various corporate bodies such as the 
family sector, the labor syndicates, business, the legal profession, and 
so on. In discussing the preservation of this vestige of the Fascist- 
inspired corporate state with a representative of one party close to 
the regime, it was obvious that the kind of upper chamber envisioned 
by the Spanish is unknown in modern Western democracies. 

Once the proposals for constitutional reform are completed, they 
will be submitted to the nation, perhaps as early as July, for a referen- 
dum. Municipal elections will follow in November, and national 
elections early in 1977. While the armed forces appear to support con- 
stitutional reform and wish to stay out of politics, they are adamant 
on three things — the Communist Party must not be legalized; Spain 
must continue to be a unitary state and must not concede too much 
autonomy to disaffected areas such as Catalonia and the Basque 
region; and public order must be preserved. Thus, the military will 
continue to be the watchdogs of the political process in Spain. 

While I find much that is disquieting about the constitutional 
reform currently being contemplated, it is nevertheless a remarkable 
beginning after more than a third of a century of dictatorship. With 
patience and persistent pressure, the United States and its allies in 
Western Europe should be able to bring about further liberalization 
in Spain. I am convinced that if the United States by rejecting the 
treaty condemns as unacceptable the still modest, but promising, 
beginning which Spain is making to become a modern, democratic 
society the effect will be not to aid democracy in that country, but 
to set it back by many years. 

1 In the present Cortes, 80 per cent of the members are indirectly chosen by the various approved corpo- 
rate bodies. Representatives of the family sector are the only ones chosen by direct ballot in which all heads, _ 
of households, including non-married adults living alone, are permitted to vote. 



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